Kaiser Permanente of the Mid-Atlantic States, the lone insurer remaining in Maryland to provide Medicare HMO coverage next year, announced yesterday that it will severely restrict new enrollment and change the terms of its plans.
Kaiser will continue to offer coverage to its 14,000 current Medicare HMO members in Maryland. But new members can join only during November, Medicare's open-enrollment month, or within three months of their 65th birthday. Previously, seniors were able to enroll any time.
The change is effective Aug. 8.
On Monday, CareFirst BlueCross BlueShield, which runs the state's largest Medicare HMO with 32,000 members, announced that it will shut its program down at the end of the year, leaving just Kaiser.
Other insurers had pulled out earlier, including UnitedHealthcare and CIGNA HealthCare. All blamed lower government reimbursement rates that they said put their programs in the red.
The pullouts leave 55,000 seniors in Maryland searching for new health coverage.
Kaiser won't be able to absorb them all, said Susan Simon, Kaiser's regional director of media relations. That's one of the reasons Kaiser is limiting enrollment and changing its plan.
"Because of the nature of our plan, we can only absorb and treat so many patients," she said. "We want to make sure people are choosing us for the right reasons."
Kaiser is still awaiting regulatory approval for its revised plan, and Simon declined to discuss modifications. But she said the changes will keep Kaiser in Maryland and "keep our head above water."
The federal Health Care Financing Administration, which regulates Medicare, also said it couldn't release details of Kaiser's plans.
But in other markets, such revisions rarely benefited patients. The restructuring often involves raising premiums and reducing benefits, said Mohit Ghose, a spokesman for the American Association of Health Plans in Washington.
The Medicare HMOs are popular with seniors because they cover preventive care, prescription drugs, and other costs that traditional Medicare doesn't cover. Of the approximately 39 million Americans in Medicare, about 27 million are eligible for HMOs and 6.5 million chose that option this year.
Ghose's association estimates that more than 700,000 Medicare HMO members nationally will be dropped by their plans.
Ghose doesn't blame the HMOs. "Plans have stuck it out as much as they possibly could," he said. "It has come to a situation where they can't even survive. ... It isn't even a question about profit, though a lot of people around here are saying that."
Federal laws required Medicare HMOs to notify the HCFA this month if they planned to drop HMO coverage. Many have done so, calling the government's 2 percent annual reimbursement increases inadequate. The HMOs contend that medical costs are increasing by 8 percent, and pharmacy costs as much as 15 percent.
In response to the exodus in June, HCFA issued this statement: "While private-sector Medicare HMOs are paid enough to provide the basic Medicare benefits, the payment formula set by law doesn't always pay enough for the extra benefits - such as prescription drugs - that they use to entice beneficiaries and make enough profit."
Both CIGNA and CareFirst wanted to stay in the market, but couldn't keep the desired benefits affordable, he said.
"This is a population that has paid into a system for their whole working lives and now they want it to work for them. Now, the plans they have so come to like can't even survive," Ghose said.
Kaiser has 8 million members nationally and 700,000 in Medicare HMOs. Current and future Kaiser members can check for premium and benefit changes Sept. 15, when all cost information is posted on the government's official Medicare Web site: www.medicare.gov.